Lonmin (LMI.LN) upgraded to BUY on Six Sigma Announcement

Investment Advising firm Smith Barney has recently upgraded Lonmin (LMI.LN) from hold to a buy status.  The upgrade is due to analysts perception that the company has been and is further able to reduce costs as well as to a strong future of the platinum group metal.  While the market for Lonmin looks strong it has been criticized in the past as a company with too high operating costs and high inefficiencies.  It appears Smith Barney has become convinced that that will change.  That change in opinion is due to the fact that the company is beginning to incorporate the Six Sigma efficiency program.  This program has in the past played an integral role in driving profits for many companies, most notably GE.  Because of the relative assurance that companies will achieve a leaner business model through the program, an announcement that a company will utilize Six Sigma is almost always erflected positively in the price of a stock.  newratings.com reports:

“Lonmin’s cost blow-out over the past three years provides substantial fat to cut,” Smith Barney says. “We believe that Lonmin can reduce costs by around $105M over the next two years maintaining unit costs at cR2,400/PGM oz”